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ECO100Y1 (400)
Lecture

SCHUMPETER


Department
Economics
Course Code
ECO100Y1
Professor
Jack Carr

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ECO360Y1 t Economic Growth and Technical Change
Schumpeter (socialist)
MORGAN t ^]o]uZÁlv]vZ]À]vPoouo}Çuv_~}vÁÁvZµ]lh^V^}
ensure full employment, needs expenditure
- WWII
- 1953 t 1st period of weakness in the post war period, high levels of unemployment
o Korean war
- Capitalism will fail
- No roles for entrepreneurs; entrepreneurs will turn away from business, task of entrepreneur is
to INNOVATE (introduce an un-tried tech, open new source of supply, etc.)
- Technical process is increasing controlled by a team of trained specialist; drives entrepreneurs
away (like amoured knight in the Middle Ages t change in military production function = loss of
knights)
CAPITALISM/ENTREPRENEURS
- Initially we have small/medium businesses replaced by LARGE firms
- Increasingly Automated t less use for entrepreneurs
- Entrepreneur looses power and force as team of specialists make the decisions for the firm
- Even if all the firms were perfectly managed, the end result will be the same, entrepreneurs will
lose economic power; private property (primary shareholders) loses power because too many
SHs
- SHs used to make decisions with entrepreneur
- Large scale enterprise decreases amount of power given to both entrepreneurs and SHS
- ^t}v}lv}ÁZ]ÁÇ]vÁZ]Z}]o]}v]vYÁ}lv}Á]Æ]t it may
}u(}uÀ}]}v~M_
- Transformation form capitalism to socialism (primary causes not entirely clear)
o More government intervention
- Rise of multinationalism (1950s)
- ^W/d>/^DEKd^hZs/s_
- ^]u}v}u]ÇuÁZ}v]À]ÇP}}vÇ]À]v]]À(}]À
}Ç_
- 1973 t CEOs predicted real wages would continue to go up until year 2000 t no one saw that
labour productivity falters
- Economic models did not adapt to changing roles of entrepreneurs
- The giant concerns of microtheorists is always one of rigid prices, restrictive output, and
extinquisher of competition (as compared to SCHUMPETER)
- I know of slow progress in regulation
- There are many forms of socialism
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